Opening the boardroom door to more women

EMPLOYING DEMAND SIDE STRATEGIES THAT FIT IN THE U.S.
In order to accelerate the glacial rate of progress in diversifying corporate boards, it is essential to forge a public-private collaboration that addresses the demand side of the board nomination process. Strategies that leverage the financial and

political clout of individuals and organizations dedicated to increasing the representation of women on United States corporate boards offer hopeful prospects for creating the meaningful change missing from the domestic landscape.

For more than 15 years, efforts to advance more women to corporate boards have concentrated on:
1) tracking and reporting on the numbers of women in leadership positions.
2) researching and advocating best practices and the business case for gender diversity on boards.
3) enlarging the pool of women qualified to be directors through special training and mentoring.
4) making qualified women more accessible to companies seeking board diversity.

These efforts have been valuable, both in the U.S. and abroad. However, after some encouraging initial increase in the number of women on boards in the U.S., the pace of change in recent years has essentially stalled.

Faced with this situation, governmental officials, business leaders and other influential advocates in a number of other countries took a different approach: using governmental action and quasi-governmental initiatives to directly (e.g., by mandated quotas) or indirectly (e.g., by required public reporting) make public companies increase board gender diversity. The results have been dramatic, most notably in European countries.

There is a general acknowledgement that the quota strategy is not a viable way to increase the number of women in the U.S. corporate boardroom. And to date, American stock exchanges have shown no interest in emulating the “comply or explain” disclosure practices adopted by their counterparts in Australia and Canada. The proxy disclosure rule enacted by the Securities & Exchange Commission in 2009 (requiring disclosure of any policy regarding board diversity but failing even to define that term) has had little or no effect in company boardrooms.

However, there is growing recognition in the U.S. that it is necessary to identify and employ strategies that affect the demand side and will influence corporate boards to actively recruit and appoint women directors. As SEC Commission Chair Mary Jo White said in her remarks at the 2014 SAIS conference (later published in InvestmentNews): “The challenge is not a lack of suitable candidates. There is adequate supply, but the challenge is creating real and committed demand.”

This is the mission of The Thirty Percent Coalition, which was founded in late 2011 to address the challenge of creating demand in ways that are relevant to U.S. practices. The Coalition is unique in several respects: it focuses solely on the demand side of board diversity – influencing corporations to strengthen their efforts to increase the number of women directors; it is limited to gender diversity on boards; and it brings together a broad coalition of some 80 senior business executives, institutional investors, professional services firm representatives, government officials, and women’s and nonprofit organizations to use their collective influence to open the corporate boardroom door here in the U.S. for the many qualified women waiting to walk through.

At its inception, Coalition members identified three key sectors with the “clout” to affect the demand for women directors in the U.S. The Coalition's three committees each pursue strategies related to the sources of power in those sectors: the financial power of institutional investors, the public policy power of government, and the persuasive power of corporate leaders.

A Committee of Institutional Investors, joined by some who are not Coalition members and representing over $3 trillion in assets under management, has reached out to companies in the Russell 1000 with no women directors. Through letters and conversations and, in some instances, shareholder resolutions, members of this Committee have engaged in collaborative conversations with company leadership resulting in changes to corporate governance charters. To date, 24 companies have elected women to boards that previously had been all male.

The Public Sector Initiatives Committee is working with key Coalition members and other public officials to support a number of cities and states that have passed or are considering resolutions (e.g., California, Illinois, Massachusetts) that encourage diverse gender representation on corporate boards of directors and executive orders or ordinances (e.g., Philadelphia) that require bidders for public contracts to disclose board diversity data and report on plans for improvement. State and city government officials who control pension funds are also engaged in institutional investor efforts, outreach to the SEC, and developing policies to vote no on non-diverse boards.

The Corporate Leaders Committee is working to enlarge the growing group of business leaders who are using their influence to publicly advocate for change and privately talk with their peers. A core group of Champions of Change (CEOs, Board Chairs, Lead Directors and Chairs and members of nominating committees) has developed a Charter of beliefs and commitments that give a roadmap for other corporate leaders to follow. Corporate executives in key positions like Chief Diversity Officer and General Counsel also have the ability to influence not only their own boards but also their peers in other companies, sharing strategies for increasing board diversity. Efforts are underway to mobilize them as well.

While we believe that the supply side initiatives need to be sustained so that more of the women entering the workforce today will be tomorrow’s leaders and that continued research and reporting also is important, we know that only demand side strategies appropriate to the U.S. environment will ensure that tomorrow’s women leaders will populate corporate boards in much greater numbers.

For further information contact This email address is being protected from spambots. You need JavaScript enabled to view it., Executive Director 

 @30PercentCo